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Stocks are at a risk of a correction if the Fed makes the right call on the economy, says Morgan Stanley
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Yahoo Finance
Most Read from MarketWatchAnd of course there’s a more-supportive monetary policy regime, with another round of easing launched last week by the Federal Reserve.
However, a team of strategists at Morgan Stanley led by Mike Wilson sound a note of caution about the potential for market ructions should the Fed not match up to investors’ hopes.
At the moment, traders are pricing in a very high likelihood of another 50 basis points of Fed rate cuts this year from the current range of 4.00% to 4.25%.
In fact, by this time next year the fed funds futures market sees the official rate around 3%.
But Wilson paints the picture of an economy that may not be in need of such aggressive rate cuts.
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